by Dr. Robert D. Hosken FEEDBACK
The noisy "Occupy Wall Street" outcry of "the other 99%" failed to recognize one basic fact: the poor have been marketed to, cajoled and pressured into giving much of their income to the bankers and investment "gurus" of Wall Street by taking out long-term loans at compound interest, in effect becoming slaves to the moneylenders. How did this come about?
In the Law of Moses we read - "In the seventh year you must declare a cancellation of debts. This is the nature of the cancellation: Every creditor must remit what he has loaned to another person; he must not force payment from his fellow Israelite, for it is to be recognized as 'the LORD's cancellation of debts'" (Deut. 15:1-2). And in v. 12 - "If your fellow Hebrew - whether male or female - is sold to you and serves you for six years, then in the seventh year you must let that servant go free." Because after six years the creditors were commanded to cancel debts and free their slaves, this was intended to ensure that lenders made no more than six-year loans. Why? Because they knew the magic of compound interest over longer terms.
So later, Nehemiah and Jeremiah had to confront the wealthy in Israel, because they had enslaved the poor by extending their loans, and would not release them according to the Law of Moses - see Neh. 5:1-12 and Jer. 34:13-17. The wise Solomon wrote - "The rich rule over the poor, and the borrower is servant to the lender" (Prov. 22:7). Today we say - "The borrower is the lender's slave." This can eventually spiral into a total financial collapse: see Is. 24:1-6. In the New Testament we read: "Owe no one anything, except to love one another" (Rom. 13:8a); and "Stand firm therefore in the liberty by which Christ has made us free, and don't be enslaved again with a yoke of bondage" (Gal. 5:1). But it is easy to slip back into bondage, both spiritual and economic. Although slavery was abolished in both Russia and the United States in the 1860s, history tells us that the rich and powerful devised ways to bring the poor back into de facto slavery by controlling the flow of money to and from the poor.
After WWII, millions of soldiers and sailors came home, got married and started the "baby boom." They needed houses for their new families, so the bankers obliged by pushing 30-year mortgages. Before the war, very few people took out long-term home mortgages, but with the "baby boom" these loans exploded, and later, credit card and student loan debts. Economics 101 teaches you that loans allow banks to actually create "new money" out of thin air at a rate of about 5 or 6 times of the banks' deposits. By 1971, this post-war explosion of new money forced the U.S. to abandon the Gold Standard, because there simply was not enough gold in Fort Knox to back up all of this newly-created money (much of this new money going to the "rich 1%").
Ever since then, the Federal Reserve and banks have been creating huge amounts of new money every year, so that we've grown accustomed to seeing our personal income increase in dollars, but be eaten up by inflation. The answer, however, is to not just complain about the rich, but to reduce the compounding of interest! As https://bretwhissel.net/cgi-bin/amortize (source of figures below) will show, 77% of your payments are interest the first year of a 30-yr. 5% mortgage, and you've only paid 1.5% on the principal. By the 6th year 74% of your payments have been interest, and even after 15 years 68% of your payments have been interest. It's like paying rent: the rich make their profits up front, and you pay off most of your principal only at the end of the loan. Let's see how this works by comparing two young men, Sam and Bill, both college grads at age 22:
Who would you rather be: a "Sam" who pays the banks $47K in interest, or a "Bill" who pays the banks $347K in interest? You can gain this same "six year loan" advantage by paying an additional principal payment each month on your mortgage. It pays for you to follow God's laws and avoid long-term debts - by doing this, you help yourself and help reduce inflation.
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FEEDBACK:
from David, 6/9/2013 5:46 PM:
Dear Bob,
You, of course, are correct in your math and theology. What you miss is when a person signs a note, he becomes a co-conspirator, for no money is lent. A signature is sold for the amount owed. This playing god is judged in Isaiah 1 and other places. It is good to be out of debt to the bankers, but that does not repair the problem. The problem is man playing god in the creation of "money" ex-nihilo, from nothing. If the church does not once more begin to enforce God's laws by recognizing only His wealth as lawful, the "faithful" have lost and the bankers win one more time. How does your church begin to reverse this basic problem?
For our King,
David
from Robert Hosken, 6/9/2013, 8:29 PM:
Hello Dave,
Thanks for your response! Because my little essay was limited to 1 page, I couldn't go into your point in detail, but it's stated in my OT references to lending. They forbid usury, which at that time meant not charging any interest. Jews were forbidden to charge interest on loans to other Jews (but as we know, they often violated this commandment).
They could, however, loan money at interest to Gentiles. This led to the Jews becoming the foremost moneylenders and bankers, which as you wrote, creates "money" ex-nihilo. As I wrote, this leads to inflation because the "new money" is not matched by real growth of the GDP.
I don't know whether the Orthodox Church has a unified, dogmatic position on borrowing and lending, although very likely some theologians have written about it.
Feel free to share the attached PDF of this article with your friends - it might make a good starting point for a Bible study discussion. We've used it in our men's group.
In Christ,
Bob